Sunday, April 22, 2012

European Splintering Escalates: Dutch Government Falls; Slovakia Government Collapsed in March; Czech Government Collapse Coming Right Up

The Netherlands government has officially collapsed in a dispute over austerity measures. Elections likely in September. Meanwhile, the Czech government is also on the verge of collapse, for the same reason: austerity measures.

The Dutch governing coalition collapsed on Saturday when far-right politician Geert Wilders pulled out of budget cut talks, saying it was not in the Netherlands’ interest to meet the deficit limit of three per cent imposed by the new European fiscal pact.

EU-imposed austerity measures have cost leaders in southern European countries, including Greece, Italy and Spain, their jobs. With the fall of the conservative Dutch government, and the possibility that Nicolas Sarkozy may lose the French presidential election that begins on Sunday, the damage seems to have spread to Europe’s prosperous north.

Highlighting widespread voter anger over EU-imposed budget cuts, Mr Wilders said he could not allow Dutch citizens to “pay out of their pockets for the senseless demands of Brussels”.

The loss of Mr Wilders’ support left the conservative government of Mark Rutte, prime minister, with just over a third of the seats in parliament.

Mr Rutte and other party leaders said that made new elections inevitable. He is expected to offer his cabinet’s resignation to the Dutch Queen on Monday, but leave the cabinet in place as a caretaker government until elections are held, probably in September.

Exiting the government at this stage will allow Mr Wilders to disclaim any responsibility for unpopular budget cuts. But the biggest winner in elections could be the far-left eurosceptic Socialist party, which has seen its support rise to as much as 20 per cent of the electorate over the past year.

Meanwhile, Dutch analysts said the inability of even the prosperous, deficit-averse Netherlands to generate voter support for Europe-directed budget cuts called the sustainability of the EU fiscal pact into question.

The Czech government faces a test of its ability to continue governing after an ambitious fiscal tightening programme splintered the ruling coalition and brought tens of thousands of protesters on to the streets of Prague at the weekend.

Petr Necas, premier, has set a Monday deadline for a breakaway group from Public Affairs – the smallest of the three parties that made up his centre-right coalition – to demonstrate that it has the support of at least 10 MPs, which would give him a working majority in the 200-member parliament.

Mr Necas has sacrificed much of his popularity after introducing a series of tax increases and benefit cuts in order to keep the budget deficit below 3 per cent next year. The additional measures were brought in after the Czech Republic posted worse than expected growth numbers – largely a consequence of the slowdown in the eurozone, the country’s largest export market.

“We cannot behave in a populist way and we must continue our policy of budget responsibility and debt reduction,” Mr Necas told reporters after one of the largest demonstrations in the Czech Republic’s post-communist history filled the streets of the capital on Saturday to protest at his policies and to show disgust with political corruption.

Organisers estimated that about 120,000 people attended, many of them jangling keys as a signal for the government to go – an echo of the protests that ousted the communists in 1989.

Slovakia Government Collapse

In case you missed it, the right-wing Slovakia government collapsed in March.

Ruling parties, political elites and former ministers in a string of EU countries are embroiled in cash-for-influence scandals that are exposing widespread allegations of corruption, triggering public revulsion and a voters' backlash.

Hunting parties, expensive gifts, drunken car crashes, secret police wiretaps, paper bags stuffed with money and public budgets being treated as private accounts all feature in the lurid revelations and allegations being leaked daily on to the front pages of central Europe.

Austria, Slovakia, Croatia and the Czech Republic are in the throes of sleaze allegations involving senior politicians and governing parties said to be funded by dirty money.

Tales of criminality, thuggery, and vast amounts of cash flowing to politicians from companies, lobbyists, and middlemen are dominating the newspapers and blogosphere across central Europe. In contrast, successful prosecutions are extremely rare for a political class that often seems to operate with impunity. Austria, Slovakia, Croatia, and the Czech Republic are in the throes of major sleaze allegations involving senior politicians and governing parties said to be funded by dirty money.

In Austria a special parliamentary committee investigating political corruption is questioning serving and former ministers this week about a convoluted web of alleged bribery and profiteering from government tenders and skewed legislation.

In an election this month next door in Slovakia, the new prime minister, Robert Fico, won a landslide after support for his rivals on the right collapsed when secret police files about the buying and selling of MPs were unearthed by a Canadian journalist and posted on the internet.

The secret police files, codenamed Gorilla, featured wiretaps of leading financiers meeting discreetly with centre-right governing politicians to trade government tenders for cash.

the latest scandal to rock the region centres on a Czech businessman and a former Prague mayor who are accused of in effect controlling the city's €2bn budget between them.

The businessman, Roman Janoušek, had long been labelled the "shadow mayor" owing to his close links with city hall, but it was not until transcripts of what are believed to be wiretaps of conversations between him and his long-time ally, former Prague city mayor Pavel Bém, were published in the daily Mladá Fronta Dnes that the scale of their alleged rigging of the city finances started to come to light.

The conversations appear to include discussions about influencing sales of city and public property, arranging expensive gifts for city officials and fixing high-ranking official posts.

On May 6 the Greek government is likely to collapse, and Nicolas Sarkozy will be ousted as president of France.

Other than four ousted governments, Troika imposed governments in Greece and Italy, huge budget misses in Spain, increased protectionist measures in France, border controls, bickering between the ECB and the German Central Bank, the Bundesbank proclamation "Not ECB's Job to Tackle Spain's Problems", Europe is holding together quite nicely.